Conn’s, Inc. (NASDAQ: CONN) (“Conn’s” or the “Company”), a
specialty retailer of furniture and mattresses, home appliances,
consumer electronics and home office products, and provider of
consumer credit, today announced its financial results for the
quarter ended October 31, 2020.
“Our third quarter results highlight the
resilience of our unique hybrid retail and credit business model
and the ability to de-risk our credit business while still
supporting retail demand through our diverse credit offerings. As a
result, we experienced another quarter of robust year-over-year
growth of cash and third-party retail sales, which increased 32.7%
over the prior fiscal year period and reflect strong demand for
home-related products. We are also quickly expanding our
digital and omnichannel capabilities to meet surging online trends
and e-commerce sales increased nearly 61% during the quarter,”
stated Norm Miller, Conn’s Chairman and Chief Executive
Officer.
“The performance of our credit segment
throughout the COVID-19 crisis demonstrates the success of the
adjustments we made earlier this year to mitigate the potential
impacts on our business of high unemployment and economic
uncertainty. While retail sales financed by our in-house
credit offering declined 27.9% from the prior fiscal year, our
credit segment is benefitting from newer, higher quality
originations and the highest rate of cash collections in over ten
fiscal years. In addition, the reduction in the portfolio
balance, driven by strong cash collections and higher cash and
third-party sales, has contributed to significant year-to-date and
third quarter operating cash flow and strengthened our balance
sheet.”
“Same store sales improved sequentially
reflecting the progress we are making to capture retail sales
opportunities while prudently managing credit risk. I am
proud of our response to the unprecedented challenges we have faced
throughout the COVID-19 pandemic and our continued commitment to
protect the health and safety of our employees, customers, and
communities. This is a testament to the experience of our
senior leadership team, the dedication of our employees and the
value our credit and retail products provide our communities.
As we successfully navigate this difficult period, I remain
confident in the direction we are headed,” concluded Mr.
Miller.
Third Quarter Results
Net income for the three months ended
October 31, 2020 was $7.4 million, or $0.25 per diluted share,
compared to net income for the three months ended October 31,
2019 of $11.5 million, or $0.39 per diluted share. On a
non-GAAP basis, adjusted net income for the three months ended
October 31, 2020 was $7.4 million, or $0.25 per diluted
share. This compares to adjusted net income for the three
months ended October 31, 2019 of $14.4 million, or $0.49 per
diluted share, which excludes facility closure costs and write-off
of software costs.
Retail Segment Third Quarter
Results
Retail revenues were $259.9 million for the
three months ended October 31, 2020 compared to $280.3 million
for the three months ended October 31, 2019, a decrease of
$20.4 million or 7.3%. The decrease in retail revenue was
primarily driven by a decrease in same store sales of 10.9% and a
decrease in repair service agreement commissions, partially offset
by new store growth. The decrease in same store sales
reflects proactive underwriting changes, combined with industry
wide supply chain disruptions in certain product categories, each
of which was the result of the COVID-19 pandemic.
For the three months ended October 31, 2020
and 2019, retail segment operating income was $15.2 million and
$19.6 million, respectively. On a non-GAAP basis, adjusted
retail segment operating income for the three months ended
October 31, 2020 was $15.2 million. On a non-GAAP basis,
adjusted retail segment operating income for the three months ended
October 31, 2019 was $22.2 million after excluding impairments
from exiting certain leases upon the relocation of three
distribution centers into one facility and a gain from the sale of
a cross-dock.
The following table presents net sales and
changes in net sales by category:
|
Three Months Ended October 31, |
|
|
|
|
|
Same Store |
(dollars in thousands) |
2020 |
|
% of Total |
|
2019 |
|
% of Total |
|
Change |
|
% Change |
|
% Change |
Furniture and mattress |
$ |
82,793 |
|
|
31.9 |
% |
|
$ |
89,070 |
|
|
31.8 |
% |
|
$ |
(6,277 |
) |
|
(7.0 |
) |
% |
|
(12.8 |
) |
% |
Home appliance |
99,872 |
|
|
38.4 |
|
|
90,343 |
|
|
32.3 |
|
|
9,529 |
|
|
10.5 |
|
|
|
6.1 |
|
|
Consumer electronics |
35,517 |
|
|
13.7 |
|
|
48,113 |
|
|
17.2 |
|
|
(12,596 |
) |
|
(26.2 |
) |
|
|
(29.3 |
) |
|
Home office |
16,711 |
|
|
6.4 |
|
|
18,681 |
|
|
6.7 |
|
|
(1,970 |
) |
|
(10.5 |
) |
|
|
(13.9 |
) |
|
Other |
4,264 |
|
|
1.6 |
|
|
4,026 |
|
|
1.4 |
|
|
238 |
|
|
5.9 |
|
|
|
19.8 |
|
|
Product sales |
239,157 |
|
|
92.0 |
|
|
250,233 |
|
|
89.4 |
|
|
(11,076 |
) |
|
(4.4 |
) |
|
|
(8.7 |
) |
|
Repair service agreement
commissions (1) |
17,465 |
|
|
6.7 |
|
|
26,478 |
|
|
9.5 |
|
|
(9,013 |
) |
|
(34.0 |
) |
|
|
(27.9 |
) |
|
Service revenues |
3,150 |
|
|
1.3 |
|
|
3,411 |
|
|
1.1 |
|
|
(261 |
) |
|
(7.7 |
) |
|
|
|
Total net sales |
$ |
259,772 |
|
|
100.0 |
% |
|
$ |
280,122 |
|
|
100.0 |
% |
|
$ |
(20,350 |
) |
|
(7.3 |
) |
% |
|
(10.9 |
) |
% |
(1) The total change in sales of repair service
agreement commissions includes retrospective commissions, which are
not reflected in the change in same store sales.
Credit Segment Third Quarter Results
Credit revenues were $74.2 million for the three
months ended October 31, 2020 compared to $95.8 million for
the three months ended October 31, 2019, a decrease of $21.6
million or 22.5%. The decrease in credit revenue was
primarily due to a decrease of 16.0% in the average balance of the
customer receivable portfolio, a decrease in insurance commissions
due to a decline in the balance of sale of our in-house credit
financing and a decrease in insurance retrospective income.
The decrease was also due to a decline in the yield rate to 21.1%
during the three months ended October 31, 2020, 60 basis
points lower than the three months ended October 31,
2019. The decline in yield rate was primarily due to an
increase in delinquencies.
Provision for bad debts was $27.4 million for
the three months ended October 31, 2020 compared to $45.4
million for the three months ended October 31, 2019, a
decrease of $18.0 million. The decrease was driven by a
greater decrease in the allowance for bad debts during the three
months ended October 31, 2020 compared to the three months
ended October 31, 2019. The decrease in the allowance
for bad debts was primarily driven by the year-over-year decrease
in the customer accounts receivable portfolio.
Credit segment operating income was $8.9 million
for the three months ended October 31, 2020, compared to $10.7
million for the three months ended October 31, 2019. On
a non-GAAP basis, adjusted credit segment operating income for the
three months ended October 31, 2020 was $8.9 million. On
a non-GAAP basis, adjusted credit segment operating income for the
three months ended October 31, 2019 was $11.9 million after
excluding impairments of software costs for a loan management
system that was abandoned during the third quarter of fiscal year
2020 in connection with the implementation of a new loan management
system.
Additional information on the credit portfolio
and its performance may be found in the Customer Accounts
Receivable Portfolio Statistics table included within this press
release and in the Company’s Form 10-Q for the quarter ended
October 31, 2020, to be filed with the Securities and Exchange
Commission on December 8, 2020 (the “Third Quarter Form
10-Q”).
Showroom and Facilities
Update
The Company opened two new Conn’s HomePlus®
showrooms during the third quarter of fiscal year 2021 and has
opened one new Conn’s HomePlus® showrooms, its first in Florida,
during the fourth quarter of fiscal year 2021, bringing the total
showroom count to 144 in 15 states. During the remainder of
fiscal year 2021, the Company plans to open two new showrooms,
bringing the total for fiscal year 2021 to nine new showrooms.
Liquidity and Capital
Resources
As of October 31, 2020, the Company had
$276.9 million of immediately available borrowing capacity under
its $650.0 million revolving credit facility, prior to giving
effect to a minimum liquidity requirement of $125.0 million
pursuant to the third amendment to our revolving credit
facility. The Company also had $107.8 million of unrestricted
cash available for use.
Operating cash flow increased 316.6% year-over-year to $385.5
million for the nine months ended October 31, 2020 driven by growth
of cash and third-party sales, strong cash payment rates on our
customer receivables portfolio and a decline in Conn’s in-house
credit originations. The increase in operating cash flow
contributed to a reduction in net debt.
On October 16, 2020, the Company completed an ABS transaction
resulting in the issuance and sale of $240.1 million aggregate
principal amount of Class A and Class B Notes secured by customer
accounts receivables and restricted cash held by a consolidated
VIE, which resulted in net proceeds of $238.5 million, and an
all-in cost of funds of 4.84%. Class C notes in aggregate
principal amount of $62.9 million were also issued in the ABS
transaction and were retained by the Company.
Conference Call Information
The Company will host a conference call on
December 8, 2020, at 10 a.m. CT / 11 a.m. ET, to discuss its
financial results for the three months ended October 31,
2020. Participants can join the call by dialing 877-451-6152
or 201-389-0879. The conference call will also be broadcast
simultaneously via webcast on a listen-only basis. A link to
the earnings release, webcast and third quarter fiscal year 2021
conference call presentation will be available at ir.conns.com.
Replay of the telephonic call can be accessed
through December 15, 2020 by dialing 844-512-2921 or 412-317-6671
and Conference ID: 13712704.
About Conn’s, Inc.
Conn’s is a specialty retailer currently
operating 144 retail locations in Alabama, Arizona, Colorado,
Florida, Georgia, Louisiana, Mississippi, Nevada, New Mexico, North
Carolina, Oklahoma, South Carolina, Tennessee, Texas and
Virginia. The Company’s primary product categories
include:
- Furniture and mattress, including furniture and related
accessories for the living room, dining room and bedroom, as well
as both traditional and specialty mattresses;
- Home appliance, including refrigerators, freezers, washers,
dryers, dishwashers and ranges;
- Consumer electronics, including LED, OLED, QLED, 4K Ultra HD,
8K and smart televisions, gaming products and home theater and
portable audio equipment; and
- Home office, including computers, printers and
accessories.
Additionally, Conn’s offers a variety of
products on a seasonal basis. Unlike many of its competitors,
Conn’s provides flexible in-house credit options for its customers
in addition to third-party financing programs and third-party
lease-to-own payment plans.
This press release contains forward-looking
statements within the meaning of the federal securities laws,
including but not limited to, the Private Securities Litigation
Reform Act of 1995, that involve risks and uncertainties. Such
forward-looking statements include information concerning our
future financial performance, business strategy, plans, goals and
objectives. Statements containing the words “anticipate,”
“believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,”
“project,” “should,” “predict,” “will,” “potential,” or the
negative of such terms or other similar expressions are generally
forward-looking in nature and not historical facts. Such
forward-looking statements are based on our current expectations.
We can give no assurance that such statements will prove to be
correct, and actual results may differ materially. A wide variety
of potential risks, uncertainties, and other factors could
materially affect our ability to achieve the results either
expressed or implied by our forward-looking statements, including,
but not limited to: general economic conditions impacting our
customers or potential customers; our ability to execute periodic
securitizations of future originated customer loans on favorable
terms; our ability to continue existing customer financing programs
or to offer new customer financing programs; changes in the
delinquency status of our credit portfolio; unfavorable
developments in ongoing litigation; increased regulatory oversight;
higher than anticipated net charge-offs in the credit portfolio;
the success of our planned opening of new stores; technological and
market developments and sales trends for our major product
offerings; our ability to manage effectively the selection of our
major product offerings; our ability to protect against
cyber-attacks or data security breaches and to protect the
integrity and security of individually identifiable data of our
customers and employees; our ability to fund our operations,
capital expenditures, debt repayment and expansion from cash flows
from operations, borrowings from our revolving credit facility, and
proceeds from accessing debt or equity markets; the effects of
epidemics or pandemics, including the COVID-19 outbreak; the impact
of our previous restatement and correction of the Company’s
previously issued financial statements; the previously identified
material weakness in the Company’s internal control over financial
reporting and the Company’s ability to remediate that material
weakness; the initiation of legal or regulatory proceedings with
respect to the prior restatement and corrections; the adverse
effects on the Company’s business, results of operations, financial
condition and stock price as a result of the previous restatement
and correction process; and other risks detailed in Part I, Item
1A, Risk Factors, in our Annual Report on Form 10-K for the fiscal
year ended January 31, 2020 and other reports filed with the
Securities and Exchange Commission. If one or more of these or
other risks or uncertainties materialize (or the consequences of
such a development changes), or should our underlying assumptions
prove incorrect, actual outcomes may vary materially from those
reflected in our forward-looking statements. You are cautioned not
to place undue reliance on these forward-looking statements, which
speak only as of the date of this press release. We disclaim any
intention or obligation to update publicly or revise such
statements, whether as a result of new information, future events
or otherwise, or to provide periodic updates or guidance. All
forward-looking statements attributable to us, or to persons acting
on our behalf, are expressly qualified in their entirety by these
cautionary statements.
CONN-G
S.M. Berger & Company
Andrew Berger (216) 464-6400
CONN’S, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(unaudited)(dollars in thousands, except per
share amounts)
|
Three Months Ended October
31, |
|
Nine Months Ended October
31, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Revenues: |
|
|
|
|
|
|
|
Total net sales |
$ |
259,772 |
|
|
$ |
280,122 |
|
|
$ |
769,838 |
|
|
$ |
848,163 |
|
Finance charges and other
revenues |
74,386 |
|
|
96,005 |
|
|
248,396 |
|
|
282,535 |
|
Total revenues |
334,158 |
|
|
376,127 |
|
|
1,018,234 |
|
|
1,130,698 |
|
Costs and
expenses: |
|
|
|
|
|
|
|
Cost of goods sold |
160,378 |
|
|
170,453 |
|
|
484,015 |
|
|
509,746 |
|
Selling, general and
administrative expense |
122,158 |
|
|
125,608 |
|
|
350,443 |
|
|
371,006 |
|
Provision for bad debts |
27,493 |
|
|
45,925 |
|
|
176,864 |
|
|
135,707 |
|
Charges and credits |
— |
|
|
3,837 |
|
|
3,589 |
|
|
3,142 |
|
Total costs and expenses |
310,029 |
|
|
345,823 |
|
|
1,014,911 |
|
|
1,019,601 |
|
Operating income |
24,129 |
|
|
30,304 |
|
|
3,323 |
|
|
111,097 |
|
Interest expense |
11,563 |
|
|
15,051 |
|
|
39,778 |
|
|
43,944 |
|
Income (loss) before income taxes |
12,566 |
|
|
15,253 |
|
|
(36,455 |
) |
|
67,153 |
|
Provision (benefit) for income
taxes |
5,147 |
|
|
3,784 |
|
|
(8,192 |
) |
|
16,201 |
|
Net income (loss) |
$ |
7,419 |
|
|
$ |
11,469 |
|
|
$ |
(28,263 |
) |
|
$ |
50,952 |
|
Income (loss) per
share: |
|
|
|
|
|
|
|
Basic |
$ |
0.25 |
|
|
$ |
0.39 |
|
|
$ |
(0.97 |
) |
|
$ |
1.65 |
|
Diluted |
$ |
0.25 |
|
|
$ |
0.39 |
|
|
$ |
(0.97 |
) |
|
$ |
1.62 |
|
Weighted average
common shares outstanding: |
|
|
|
|
|
|
|
Basic |
29,142,843 |
|
|
29,094,062 |
|
|
29,013,759 |
|
|
30,796,114 |
|
Diluted |
29,483,481 |
|
|
29,710,740 |
|
|
29,013,759 |
|
|
31,353,834 |
|
CONN’S, INC. AND SUBSIDIARIES
CONDENSED RETAIL SEGMENT FINANCIAL
INFORMATION(unaudited)(dollars in thousands)
|
Three Months Ended October
31, |
|
Nine Months Ended October
31, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Revenues: |
|
|
|
|
|
|
|
Product sales |
$ |
239,157 |
|
|
$ |
250,233 |
|
|
$ |
702,497 |
|
|
$ |
759,256 |
|
Repair service agreement
commissions |
17,465 |
|
|
26,478 |
|
|
57,730 |
|
|
78,149 |
|
Service revenues |
3,150 |
|
|
3,411 |
|
|
9,611 |
|
|
10,758 |
|
Total net sales |
259,772 |
|
|
280,122 |
|
|
769,838 |
|
|
848,163 |
|
Finance charges and other |
168 |
|
|
197 |
|
|
599 |
|
|
602 |
|
Total revenues |
259,940 |
|
|
280,319 |
|
|
770,437 |
|
|
848,765 |
|
Costs and
expenses: |
|
|
|
|
|
|
|
Cost of goods sold |
160,378 |
|
|
170,453 |
|
|
484,015 |
|
|
509,746 |
|
Selling, general and
administrative expense |
84,245 |
|
|
87,105 |
|
|
241,003 |
|
|
254,874 |
|
Provision for bad debts |
72 |
|
|
535 |
|
|
422 |
|
|
645 |
|
Charges and credits |
— |
|
|
2,628 |
|
|
1,355 |
|
|
1,933 |
|
Total costs and expenses |
244,695 |
|
|
260,721 |
|
|
726,795 |
|
|
767,198 |
|
Operating income |
$ |
15,245 |
|
|
$ |
19,598 |
|
|
$ |
43,642 |
|
|
$ |
81,567 |
|
Retail gross margin |
38.3 |
% |
|
39.2 |
% |
|
37.1 |
% |
|
39.9 |
% |
Selling, general and
administrative expense as percent of revenues |
32.4 |
% |
|
31.1 |
% |
|
31.3 |
% |
|
30.0 |
% |
Operating margin |
5.9 |
% |
|
7.0 |
% |
|
5.7 |
% |
|
9.6 |
% |
Store
count: |
|
|
|
|
|
|
|
Beginning of period |
141 |
|
|
131 |
|
|
137 |
|
|
123 |
|
Opened |
2 |
|
|
6 |
|
|
6 |
|
|
14 |
|
End of period |
143 |
|
|
137 |
|
|
143 |
|
|
137 |
|
CONN’S, INC. AND SUBSIDIARIES
CONDENSED CREDIT SEGMENT FINANCIAL
INFORMATION(unaudited)(dollars in thousands)
|
Three Months Ended October
31, |
|
Nine Months Ended October
31, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Revenues: |
|
|
|
|
|
|
|
Finance charges and other revenues |
$ |
74,218 |
|
|
|
$ |
95,808 |
|
|
|
$ |
247,797 |
|
|
|
$ |
281,933 |
|
|
Costs and
expenses: |
|
|
|
|
|
|
|
Selling, general and
administrative expense |
37,913 |
|
|
|
38,503 |
|
|
|
109,440 |
|
|
|
116,132 |
|
|
Provision for bad debts |
27,421 |
|
|
|
45,390 |
|
|
|
176,442 |
|
|
|
135,062 |
|
|
Charges and credits |
— |
|
|
|
1,209 |
|
|
|
2,234 |
|
|
|
1,209 |
|
|
Total costs and expenses |
65,334 |
|
|
|
85,102 |
|
|
|
288,116 |
|
|
|
252,403 |
|
|
Operating income (loss) |
8,884 |
|
|
|
10,706 |
|
|
|
(40,319 |
) |
|
|
29,530 |
|
|
Interest expense |
11,563 |
|
|
|
15,051 |
|
|
|
39,778 |
|
|
|
43,944 |
|
|
Loss before income taxes |
$ |
(2,679 |
) |
|
|
$ |
(4,345 |
) |
|
|
$ |
(80,097 |
) |
|
|
$ |
(14,414 |
) |
|
Selling, general and
administrative expense as percent of revenues |
51.1 |
|
% |
|
40.2 |
|
% |
|
44.2 |
|
% |
|
41.2 |
|
% |
Selling, general and
administrative expense as percent of average outstanding customer
accounts receivable balance (annualized) |
11.5 |
|
% |
|
9.8 |
|
% |
|
10.2 |
|
% |
|
9.9 |
|
% |
Operating margin |
12.0 |
|
% |
|
11.2 |
|
% |
|
(16.3 |
) |
% |
|
10.5 |
|
% |
CONN’S, INC. AND SUBSIDIARIES
CUSTOMER ACCOUNTS RECEIVABLE PORTFOLIO
STATISTICS(unaudited)
|
As of October 31, |
|
2020 |
|
2019 |
Weighted average credit score
of outstanding balances (1) |
599 |
|
|
592 |
|
Average outstanding customer balance |
$ |
2,515 |
|
|
$ |
2,735 |
|
Balances 60+ days past due as
a percentage of total customer portfolio carrying value (2)(3) |
11.5 |
% |
|
10.1 |
% |
Balances 60+ days past due (in
thousands) (2) |
$ |
141,441 |
|
|
$ |
152,825 |
|
Re-aged balance as a
percentage of total customer portfolio carrying value (2)(3) |
28.2 |
% |
|
27.8 |
% |
Re-aged balance (in thousands)
(2) |
$ |
347,113 |
|
|
$ |
422,771 |
|
Carrying value of account
balances re-aged more than six months (in thousands) (3) |
$ |
98,307 |
|
|
$ |
110,016 |
|
Allowance for bad debts and
uncollectible interest as a percentage of total customer accounts
receivable portfolio balance (4) |
24.9 |
% |
|
13.6 |
% |
Percent of total customer
accounts receivable portfolio balance represented by no-interest
option receivables |
18.0 |
% |
|
21.8 |
% |
|
Three Months Ended October
31, |
|
Nine Months Ended October
31, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Total applications
processed |
285,569 |
|
|
305,525 |
|
|
908,078 |
|
|
875,374 |
|
Weighted average origination
credit score of sales financed (1) |
618 |
|
|
608 |
|
|
615 |
|
|
608 |
|
Percent of total applications
approved and utilized |
22.7 |
% |
|
25.6 |
% |
|
21.6 |
% |
|
27.1 |
% |
Average income of credit customer at origination |
$ |
46,900 |
|
|
$ |
46,100 |
|
|
$ |
46,500 |
|
|
$ |
45,700 |
|
Percent of retail sales paid
for by: |
|
|
|
|
|
|
|
In-house financing, including down payments received |
51.5 |
% |
|
66.7 |
% |
|
52.6 |
% |
|
67.9 |
% |
Third-party financing |
20.3 |
% |
|
18.5 |
% |
|
20.6 |
% |
|
17.5 |
% |
Third-party lease-to-own option |
7.2 |
% |
|
7.0 |
% |
|
8.0 |
% |
|
7.2 |
% |
|
79.0 |
% |
|
92.2 |
% |
|
81.2 |
% |
|
92.6 |
% |
(1) Credit scores exclude non-scored accounts.
(2) Accounts that become delinquent after being re-aged are
included in both the delinquency and re-aged amounts.
(3) Carrying value reflects the total customer accounts
receivable portfolio balance, net of deferred fees and origination
costs, the allowance for no-interest option credit programs and the
allowance for uncollectible interest.
(4) For the period ended October 31, 2020, the allowance for bad
debts and uncollectible interest is based on the current expected
credit loss methodology required under ASC 326. For the
period ended October 31, 2019, the allowance for bad debts and
uncollectible interest is based on the incurred loss
methodology.
CONN’S, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS(unaudited)(in thousands)
|
October 31, 2020 |
|
January 31, 2020 |
|
|
|
|
|
|
|
|
Assets |
|
|
|
Current
Assets: |
|
|
|
Cash and cash equivalents |
$ |
107,822 |
|
|
$ |
5,485 |
|
Restricted cash |
78,374 |
|
|
75,370 |
|
Customer accounts receivable,
net of allowances |
489,841 |
|
|
673,742 |
|
Other accounts receivable |
56,414 |
|
|
68,753 |
|
Inventories |
216,161 |
|
|
219,756 |
|
Income taxes receivable |
10,631 |
|
|
4,315 |
|
Prepaid expenses and other
current assets |
9,944 |
|
|
11,445 |
|
Total current assets |
969,187 |
|
|
1,058,866 |
|
Long-term portion of customer
accounts receivable, net of allowances |
444,352 |
|
|
663,761 |
|
Property and equipment,
net |
191,079 |
|
|
173,031 |
|
Operating lease right-of-use
assets |
269,770 |
|
|
242,457 |
|
Deferred income taxes |
44,725 |
|
|
18,599 |
|
Other assets |
14,343 |
|
|
12,055 |
|
Total assets |
$ |
1,933,456 |
|
|
$ |
2,168,769 |
|
Liabilities and Stockholders’ Equity |
|
|
|
Current
liabilities: |
|
|
|
Current finance lease
obligations |
$ |
769 |
|
|
$ |
605 |
|
Accounts payable |
74,338 |
|
|
48,554 |
|
Accrued expenses |
90,191 |
|
|
63,090 |
|
Operating lease liability -
current |
37,663 |
|
|
35,390 |
|
Other current liabilities |
13,801 |
|
|
14,631 |
|
Total current liabilities |
216,762 |
|
|
162,270 |
|
Operating lease liability -
non current |
362,035 |
|
|
329,081 |
|
Long-term debt and finance
lease obligations |
800,586 |
|
|
1,025,535 |
|
Other long-term
liabilities |
25,602 |
|
|
24,703 |
|
Total liabilities |
1,404,985 |
|
|
1,541,589 |
|
Stockholders’ equity |
528,471 |
|
|
627,180 |
|
Total liabilities and stockholders’ equity |
$ |
1,933,456 |
|
|
$ |
2,168,769 |
|
CONN’S, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATIONS(unaudited)(dollars in
thousands, except per share amounts)
Basis for presentation of non-GAAP
disclosures:
To supplement the Condensed Consolidated Financial Statements,
which are prepared and presented in accordance with accounting
principles generally accepted in the United States of America
(“GAAP”), the Company also provides the following non-GAAP
financial measures: adjusted retail segment operating income,
adjusted credit segment operating income (loss), adjusted net
income (loss) and adjusted net income (loss) per diluted
share. These non-GAAP financial measures are not meant to be
considered as a substitute for, or superior to, comparable GAAP
measures and should be considered in addition to results presented
in accordance with GAAP. They are intended to provide
additional insight into our operations and the factors and trends
affecting the business. Management believes these non-GAAP
financial measures are useful to financial statement readers
because (1) they allow for greater transparency with respect to key
metrics we use in our financial and operational decision making and
(2) they are used by some of our institutional investors and the
analyst community to help them analyze our operating results.
RETAIL SEGMENT ADJUSTED OPERATING INCOME
AND RETAIL SEGMENT ADJUSTED OPERATING
MARGIN
|
Three Months Ended October
31, |
|
Nine Months Ended October
31, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Retail segment operating income, as reported |
$ |
15,245 |
|
|
$ |
19,598 |
|
|
$ |
43,642 |
|
|
$ |
81,567 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional fees (1) |
— |
|
|
— |
|
|
1,355 |
|
|
— |
|
Facility relocation costs (2) |
— |
|
|
2,628 |
|
|
— |
|
|
1,933 |
|
Retail segment operating income, as adjusted |
$ |
15,245 |
|
|
$ |
22,226 |
|
|
$ |
44,997 |
|
|
$ |
83,500 |
|
Retail segment total
revenues |
$ |
259,940 |
|
|
$ |
280,319 |
|
|
$ |
770,437 |
|
|
$ |
848,765 |
|
(1) Represents professional fees associated with non-recurring
expenses.
(2) Represents impairments from exiting certain leases upon the
relocation of three distribution centers into one facility and the
gain from the sale of a cross-dock during the three and nine months
ended October 31, 2019. Includes an additional gain from
increased sublease income related to the consolidation of our
corporate headquarters during the nine months ended October 31,
2019.
CREDIT SEGMENT ADJUSTED OPERATING INCOME
(LOSS) AND CREDIT SEGMENT ADJUSTED OPERATING
MARGIN
|
Three Months Ended October
31, |
|
Nine Months Ended October
31, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Credit segment operating income (loss), as
reported |
$ |
8,884 |
|
|
$ |
10,706 |
|
|
$ |
(40,319 |
) |
|
$ |
29,530 |
|
Adjustments: |
|
|
|
|
|
|
|
Professional fees (1) |
— |
|
|
— |
|
|
2,234 |
|
|
— |
|
Write-off of software costs (2) |
— |
|
|
1,209 |
|
|
— |
|
|
1,209 |
|
Credit segment operating income (loss), as
adjusted |
$ |
8,884 |
|
|
$ |
11,915 |
|
|
$ |
(38,085 |
) |
|
$ |
30,739 |
|
Credit segment total
revenues |
$ |
74,218 |
|
|
$ |
95,808 |
|
|
$ |
247,797 |
|
|
$ |
281,933 |
|
(1) Represents professional fees associated with non-recurring
expenses.
(2) Represents impairments of software costs for a loan
management system that was abandoned during the third quarter of
fiscal year 2020 related to the implementation of a new loan
management system.
ADJUSTED NET INCOME (LOSS) AND ADJUSTED
NET INCOME (LOSS) PER DILUTED SHARE
|
Three Months Ended October
31, |
|
Nine Months Ended October
31, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Net income (loss), as reported |
$ |
7,419 |
|
|
$ |
11,469 |
|
|
$ |
(28,263 |
) |
|
$ |
50,952 |
|
Adjustments: |
|
|
|
|
|
|
|
Professional fees (1) |
— |
|
|
— |
|
|
3,589 |
|
|
— |
|
Facility relocation costs (2) |
— |
|
|
2,628 |
|
|
— |
|
|
1,933 |
|
Write-off of software cost (3) |
— |
|
|
1,209 |
|
|
— |
|
|
1,209 |
|
Tax impact of adjustments |
— |
|
|
(861 |
) |
|
(804 |
) |
|
(705 |
) |
Net income (loss), as adjusted |
$ |
7,419 |
|
|
$ |
14,445 |
|
|
$ |
(25,478 |
) |
|
$ |
53,389 |
|
Weighted average common shares
outstanding - Diluted |
29,483,481 |
|
|
29,710,740 |
|
|
29,013,759 |
|
|
31,353,834 |
|
Earnings (loss) per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As reported |
$ |
0.25 |
|
|
$ |
0.39 |
|
|
$ |
(0.97 |
) |
|
$ |
1.62 |
|
As adjusted |
$ |
0.25 |
|
|
$ |
0.49 |
|
|
$ |
(0.88 |
) |
|
$ |
1.70 |
|
(1) Represents professional fees associated with non-recurring
expenses.
(2) Represents impairments from exiting certain leases upon the
relocation of three distribution centers into one facility and the
gain from the sale of a cross-dock during the three and nine months
ended October 31, 2019. Includes an additional gain from
increased sublease income related to the consolidation of our
corporate headquarters during the nine months ended October 31,
2019.
(3) Represents impairments of software costs for a loan
management system that was abandoned during the third quarter of
fiscal year 2020 related to the implementation of a new loan
management system.
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